In fact, dual pricing is a red herring because it is no longer relevant in the marketplace.
Continuing to say that the dual pricing situation has improved risks lulling brokers into a false sense of well-being because the true situation when it comes to broker versus direct products is much more threatening to intermediary businesses.
The truth is that some lenders have stopped dual pricing simply by cutting out brokers altogether and offering only direct products.
Others that do distribute through brokers switch in and out of dual pricing as it suits them.
HSBC has never had an intermediary product range. It has stated that it intends to use its advantage over other lenders to substantially increase its market share. Looking at its aggressively priced product range, it is clear that rival broker products do not compete.
Our regular Home Buyer Sourcing Index, which is based on whole-of-market sourcing information supplied by Defaqto, shows that only 17% of all mortgage deals at 75% LTV and above are distributed via brokers.
Also, the best direct products at all LTVs can be up to £5,000 cheaper for customers over two years than comparable broker deals.
This is based on modest mortgages. Some of our users have told us they have been able to demonstrate savings in excess of £10,000 with their customers.
With such a tiny share of the market and uncompetitive intermediary products, the only way for brokers to survive is to invest in the capability to offer true whole-of-market sourcing using a system such as ours, and move towards a remuneration model that includes administration fees payable by clients if appropriate.
Using this system, converting more mortgage enquiries would also mean more insurance business could be done.
I suggest AMI moves on from announcing false dawns on dual pricing – which is now a dead issue – and gets behind the real problem, which is why brokers are often not allowed to act on behalf of customers when recommending direct products. That is the topic of the moment.
Home Buyer Systems